The list of policing activities up for grabs includes investigating crimes, detaining suspects, developing cases and responding to and investigating incidents. Photograph: Leon Neal/AFP/Getty Images

A radical plan to give private companies responsibility for investigating crimes, patrolling neighbourhoods and even detaining suspects will have "catastrophic consequences", the leader of rank and file officers has warned.

Simon Reed, vice-chairman of the Police Federation of England and Wales, said the privatisation proposals would jeopardise the chance of successful investigations and convictions and lead to the "destruction of the finest police service in the world".

West Midlands and Surrey have invited bids from G4S and other large security companies on behalf of all forces across England and Wales to take over the delivery of a wide range of services previously carried out by the police.

The list of policing activities up for grabs includes investigating crimes, detaining suspects, developing cases, responding to and investigating incidents, supporting victims and witnesses, managing high-risk individuals, patrolling neighbourhoods, managing intelligence, managing engagement with the public, as well as more traditional back-office functions, such as managing forensics, providing legal services, managing the vehicle fleet, finance and human resources.

Chief superintendent Phil Kay, who is overseeing the joint West Midlands/Surrey "transformation" programme, said it was about dealing with the challenging financial conditions the force currently faced.

"We want to explore how working with people in the private sector might be able to give us a new dimension and help us transform our service.

"We also want to see what areas of business there are where we can work with partners in the private sector to deliver in a way that is more cost-effective, efficient and helps to improve the service."

The West Midlands police are already planning to cut 2,764 police jobs over the next three years and the privatisation programme is not designed to meet the immediate budget gaps. Savings are anticipated after 2014.

Labour shadow home secretary Yvette Cooper expressed concern that the programme was being pursued for financial reasons rather than to improve performance.

She said: "The possibility of including the management of high-risk individuals, patrolling public places or pursuing criminal investigations in large private-sector contracts rather than core professional policing raises very serious concerns.

"It is fundamental to British policing that it has the trust of the people. That means policing decisions are impartial, in the interests of justice, stopping crime and catching criminals."

The contract is the largest on police privatisation so far, with a potential value of £1.5bn over seven years, rising to a possible £3.5bn depending on how many other forces get involved.

The proposals follow the imposition of a 20% cut in Whitehall grants on forces by the home secretary, Theresa May.

She has said frontline policing can be protected by using the private sector to transform services provided to the public, but this is the first clear indication of what that will mean in practice. May said on Thursday that she hoped the "business partnership" programme would be in place next spring.

A 26-page "commercial in confidence" contract note seen by the Guardian has been sent to potential bidders to run all services that "can be legally delegated to the private sector". They do not include those that involve the power of arrest and the other duties of a sworn constable.

A number of other forces, including Cleveland, Avon and Somerset, and Cheshire, have been exploring the services that might be offered to the private sector.

Cleveland police have a 10-year contract with IT firm Steria to provide call handling, front desk staffing, and aspects of the criminal justice system on top of computer services, finance and training. Reliance security runs Cleveland's custody suites.

Avon and Somerset had a contract with IBM, called South West One, which suffered problems in its first three years. Some services are to be taken back in-house. Cheshire has a more traditional contract with Capgemini to provide finance, facilities and fleet management.